Complementary Products and Markets Create Opportunities for Growth in Global Electrical Industry
Cooper Shareholders to Receive $39.15 per Share in Cash and 0.77479 in Ordinary Shares for 29% Premium; Transaction Equity Value of $11.8 Billion.
The Acquisition is expected to be accretive to operating earnings per share by $0.35 in 2014 and by $0.45 in 2015. Excluding the non-cash expense related to the amortization of intangibles arising from purchase accounting, the Acquisition is expected to be accretive to operating earnings per share by $0.65 in 2014 and by $0.75 in 2015 . The Acquisition will be financed with a mixture of cash, debt, and equity.
Under the terms of the Transaction Agreement, Cooper Shareholders will receive $39.15 in cash and 0.77479 shares of New Eaton for each Cooper share. Based on the Closing Price for Eaton common stock on Friday May 18, 2012, Cooper Shareholders will receive cash and shares valued at $72.00 per share, representing a premium of 29 percent and a total transaction equity value of approximately $11.8 billion . Eaton Shareholders will receive one share of the new company for each share of Eaton that they own upon closing. The transaction will be taxable, for U.S. federal income tax purposes, to both the Eaton Shareholders and the Cooper Shareholders. Eaton Shareholders are expected to own approximately 73 percent of the combined company while legacy Cooper Shareholders are expected to own approximately 27 percent. Shares of New Eaton will be registered with the U.S. SEC and are expected to trade on the New York Stock Exchange under the ticker symbol ETN. Eaton has secured a $6.75 billion fully underwritten bridge financing commitment from Morgan Stanley Bank, N.A., Morgan Stanley Senior Funding, Inc. and Citibank, N.A. to finance the cash portion of the Acquisition. Eaton plans to later refinance these bridge borrowings through a new term debt issuance, use of cash on hand, and the possible sale of assets.
The combination is subject to the terms of a Transaction Agreement among Eaton, Cooper, New Eaton and certain other parties. The acquisition of Cooper by New Eaton will be effected by means of a “scheme of arrangement” under Irish law pursuant to which New Eaton will acquire all of the outstanding shares of Cooper from Cooper Shareholders for cash and shares (the “Acquisition”). The Acquisition will be subject to the terms and conditions to be set forth in the scheme of arrangement document to be delivered to Cooper Shareholders. To become effective, the scheme of arrangement will require, among other things, the approval of a majority in number of Cooper Shareholders, present and voting either in person or by proxy at a special Cooper Shareholder meeting, representing 75 percent or more in value of the Cooper shares held by such holders. Following the requisite Cooper Shareholder approval being obtained, the sanction of the Irish High court is also required. In addition, the Transaction Agreement must be adopted by shareholders holding two-thirds of the outstanding voting shares of Eaton in a special shareholder meeting. The Acquisition, which is unanimously recommended by the Boards of Directors of both companies, also is subject to receipt of certain regulatory approvals and certain other conditions, as more particularly set out in Appendix III to the Rule 2.5 Announcement.
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